Question

-What are the benefits of intraindustry trade of differerentiated products?

-Try to think of a good that you value that you probably would not be able to obtain without trade in differentiated products. Explain why you think you think this to be the case.

Answer 1

Benefits of intraindustry trade of differerentiated products :
1. Stimulates creativity and innovation which improves product quality.
2. An improvement in product quality, would increase demand and generally lead to better revenue.
3. The economies of scale would lead to increase in products supplied and lower the average costs for consumers
4. Specialization in certain products, owing to the intra industrial trade would result in division of labor.
5. Consumers can benefit from the lower costs and available variety of goods.